Case Study

MCDONALD’S CORPORATION

Presented By : Group-1

Amit : 80118180006

Aravind : 80118180007

Nidhi : 80118180032
General information: founded in 1940 at California
 Agenda of Discussion

A.Case Brief

B. Product Strategy

C. Process Strategy

D. Recommendations to improve long term/medium

term/short term.
 Case Brief
McDonald’s had distinguished itself in the quick-service industry through its
remarkable consistency across all units. (+ve)

McDonald’s every restaurant – symbolized pleasant, fast service and tasty,

inexpensive food. (+ve)

Very big numbers of outlets can be a troubling question for management. (??)

Saturation point : how could it possibly attract more business? External pressures
reinforced the dilemma. (??)

Demographic trends were reshaping American eating habits while competitors were
attacking the quick-service giant from all sides. (??)

Threats from chains featured deeply discounted menus, McDonald’s faced

competition. (??)
Sales per unit had slowed between 1990 and 1991, causing management to
wonder whether the company’s operating system, as suited to the new
circumstances the company faced. (??)

To what extent should McDonald’s change its operations strategy to accommodate

the growing need for flexibility and variety in products. (??)
 Portfolio of
products Optimization

Product
structure Modularization

re
tu
u c w Sub
t r lo assembly Standardization

t S F structure
c
u lys i s
d
o na
r
P A Components Standardization

Sub
components Standardization
 Product Portfolio
Major Product Categories and subcategories:
Burgers &
sandwiches Happy Meals Drinks
Salads

Hamburger
Hamburger Milk shake
Chunky
Cheesburge Chicken
r

Quarter Cheeseburger Milk (4 SKU)

ponder with
cheese
Chef

Big Mac McNuggets Orange Juice

McLean
deluxe(3 Garden
SKU) coffee

McChicken
Sandwich
Iced tea (4 sku)
side
McNuggets
(3 SKU)
Coke
Breakfast Menu Deserts French Fries
Egg McMuffin
Apple pie
Sausage Mcmuffin Small Fries

Chocolate
Big Bfreakfast cookies Medium
Fries
Hot cake McDonaldlan
d cookies
Sausage Buiscuits Large fries
Sundaes
Bacon/Eggs

Breakfast Burrito Cones

Apple Bran Muffin

Cereal
 Product Strategy
Marketing Mix: Think Local Act Global
 Main Product Strategies
1. Permanent Product Strategy :
• McDonald's features several products on their menu that are permanent
and do not change.

• For Ex- Basic hamburger and cheeseburger, the Big Mac and the Quarter
Pounder.

• After the initial development, these items remain on the menu for
extended periods of time without undergoing significant changes.

• This strategy ensures that there is always something familiar for

consumers on the menu.
2. Temporary Product Strategy :
• In addition to its permanent product offerings, McDonald's regularly
develops temporary products.

• The McRib, for example, is a product that is offered only seasonally.

• The purpose of this product development strategy is to give customers

something new to experience on each visit and to experiment with new
items that may become permanent.

3. Local Product Development Strategy

• Created several products to meet consumer demand in the local markets.

• In the Netherlands, for example, they have developed the McKroket, a

burger featuring a typically Dutch kroket, a deep-fried, ragout-filled patty.

• This strategy ensures that local customers have foods to fit their tastes.
4. Local Adaptation Strategy :
• McDonald's also use an adaptation strategy whereby they take a product
and modify it to fit local tastes.

• In India, for instance, the Big Mac has been modified into the Maharaja
Mac which contains no beef, in keeping with local diets.

• In Greece, the Big Mac has been adapted to use a pita bread instead of a
bun.

• Even the McLobster has been adapted to the McCrab in some U.S.
markets where crab is a common food.
 Examples of adaption
Core menu items standardized :
Big Mac, Cheesburger, Hamburger, Chicken McNuggets and fries.

Respecting the local culture:

Every country has its own policy of developing menu items.

China India Norway Germany

 McDonalds USP
1. Quality:
• Serve the best quality food- extensive cold chain distribution to ensure freshness.
• Product supplies used as first in first out manner.
• Using latest state of equipment's.

2.Services:
• Provide fast and quality service
• Friendly and attentive service.
• Accuracy in order taking.

3. Cleanliness:
• Provide clean, comfortable environment suitable for families.
• Walk around the restaurant to observe cleanliness around.

4. Value:
• Provide value to customer: menu is priced at a value that large customers can afford.
• Focus on economics of scale to reduce the cost rather than compromising the quality.
 Product Competitive Advantage
1. Low cost Leadership with best quality product.

For Example: Hamburger ( Low cost Leadership)

2. Differentiation :
For Example : French fries

• McDonald’s had made French fries standard fare for a meal

• French fries became the restaurant chain’s most distinctive item.
• Its length and way of cooking also exclusive.
• Best potato quality.
 Product structure observation
McDonalds have good product portfolio.

McDonald product mix is varied and different from the other competitor.

Fast moving product are taken up as MTS structure while slow moving
are taken as MTO or ATO structure.
For Example:
i)Standard Bun toasting . If demand is high it be MTS otherwise its move
to MTO.
ii) Standard Hamburger Assembly: MTS for high demand. ATO for low
demand
iii) Special Burger assembly: MTO or ATO.
Process Strategy
 Process Structure Analysis Flow
Planning Process
Sourcing Process
Making Process
Legal Process
Cash Control Process
Supply Conversion Demand
Market Process Market

S C
Production Process at McDonalds
Speedee service system (standardization in preparation method):
• Exact product specification
• customized equipments

Consistency & uniformity across all outlets.

• Same quality & service in each visit.

• Same test across the world.
• Same packaging
• Globally (USA, Tokyo, India, Australia and the like)

Concentrated on 4 areas

• Improving product
• Developing outstanding supplier relations.
• Improving equipment
• Training & monitoring franchisees.
Focus on innovation
• Innovative Potato growing method;
• Alternating potato processing method
• Efficient cooking equipment – w.r.t restaurant’s needs
• Restricted Menu items - Operational Excellence
• Precision on input quantity
• Example: Precise quarter ounce of onion in hamburger

Suppliers
• Excellent relation with supplier.
• Created new set of major institutional vendors.
• Suppliers knew McD’s need very efficiently
• McD checked on Suppliers and Franchisees regularly
Franchise
• Generate 39 % revenue from franchises.
• Allow franchise to make money initially through their success
• Corporate management & suppliers - franchises infused with entrepreneurial spirit.

Cooking up Products
• Distinguished menu offerings - rigorous operating system
• Focus on uniformity.
• Restaurant’s process summarised in 3 categories:
• Quality
• Service
• Cleanliness
• Value
• For Customers having Lunch and Breakfast – Speed and Convenience
• For Customers having Dinner – Full meals, More Complete Service
• Outdo competitors through service and consistency
 Process Strategy
• Process and Capacity Design - efficiency for cost-minimization
• Operating System - Uniformity
• Simple Formula:
o Limited Menu
o Low Price
o Fast Service
 Process Strategy
• McDonald's Success, Rapid Growth & Market Dominance DUE TO
o Focus on Customer Satisfaction
o Ways to Make Customers More Satisfied:
• with Fast Service
• by Creating a Clean Environment
• with Higher Quality Products
• with Affordable Prices
o McDonald's Success is their Relationship with Suppliers –
• Promises Loyalty in Business in Exchange for Innovation
Challenges & recommendations
Main Competitors
 Challenges
• Customers' new habit.

• Competitors lower and discounted price.

• Variety constraints.

• Service benchmarking.

• Environment protection.
1. Non nutrients
2. Obesity
3. Working Conditions :
5. Mis representations :
6. Environmental hazards:
 General Recommendations
• Must try to create an eco friendly image E.g: can come up green
logo or building structure.

• To save environmental hazards , it can use solar panels, electric

car charging points, LED lighting etc.

• Improvement in customer service through free wifi, 24 hrs

service, drive thru.

• Product can be more customized i.e. customer can create own

test through mobile app.
• Children play area and party area can be enhanced.

• Commitment to an improved nutrition.

• Campaign like “Feedback or questions about Food”. Opportunity

to customers to ask questions about the quality and origin of the
food. This will increase the transparency and patronage.
• Addressing the advertisement misrepresentation.
For ex. Burger size in ads seems bigger than the real one. This
clarification will enhance the trust of customers.

• Commitment to employees. Proper career path for the

employees, good wages, etc.

•
 Long Term Recommendations
Focus on convenience and technology in an attempt to win
customers from competing quick-service restaurants.

Going digital is McDonald’s’ most recent push to lure customers

back to its stores.

Digital engagement is an increasingly important aspect of the

modern foodservice experience and it enhances the level of
convenience that consumers want and expect from a quick-service
chain.

Digital channels, whether through self-service kiosks, mobile

ordering, or even delivery, help make the chain more accessible,
and should be a positive driver of traffic.
 “Experience of the Future” restaurant:

kiosk ordering and table service, increasing

functionality with the mobile app, and a “more modern,
more exciting restaurant environment.”

Through the mobile order and pay feature, McDonald’s

says its customers will also be able to skip the drive thru
and choose curbside delivery.

If customers choose the drive thru, they will read the

already placed order code from the app and the order
will be ready for pickup at the window.
Social Networking

McDonald's, for the most part, relies on

traditional marketing means to attract its
diners.

It is not using the medium by which the

adolescent/tween/teen demographics are in
contact with.

The company has to develop a social

networking strategy and implement it pronto.
Thanks